Gary Oxborough is Practice Principal here at Barlow Irvin Financial Services and this month gives his advice about the Help to Buy scheme.
The Government’s Help to Buy scheme is due to end in April 2023. The scheme, which has been running since 2013, is designed to help property buyers who have a smaller deposit. This is done by a government contribution to the deposit, known as the Help to Buy Loan, of up to 20% of the purchase price. This is known as a shared equity agreement, which means that the government will be entitled to a percentage of the property value when the Help to Buy loan is repaid. This means that the amount repaid may be higher than borrowed if the property has increased in value (or less if the value has gone down). The scheme is currently only available to first time buyers who are buying a new build property. Help to Buy has proved extremely popular over the time it has been available and whilst it does have downsides that need to be considered, it has helped many of our clients onto the housing ladder.
There is now another option in this market. A lender called Proportunity has recently entered the market with a product similar to the Help to Buy scheme. However, this option is not limited to first time buyers or new build properties. This works in the same way, in that it is a shared equity loan, so Proportunity will be entitled to a percentage of the value of the property when the loan is repaid. As they are a private lender, there is also an interest charge payable on the loan, which should be considered.
The main advantage of schemes like these are that you can potentially purchase a more expensive property with a smaller deposit, depending on your income and the lender’s affordability calculations.
This is quite a specialised product and it’s vital you take professional advice. If you’d like to know more, speak to one of our expert mortgage advisors who will make sure you know exactly what the best option for your personal circumstances are. Please email us at office@barlow-irvin.co.uk or call us on 01204 304 814.
As a mortgage is secured against your home or property, it could be repossessed if you do not keep up mortgage repayments.
Photo courtesy of Gov.UK